Is this the return of the bull market?

On 3 Nov, when I blogged about Macquarie's SiMSCI warrants, a reader, AT, mentioned that "Macquarie runs regular warrant workshops at the SGX, I found the speakers honest and knowledgeable." Seminars are taking place again on 22 and 23 Nov:

Date: 22 Nov 10 (Monday)
Partner: DBS
Location: SGX Auditorium, Level 2, Shenton Way.

Date: 23 Nov 10 (Tuesday)
Partner: Philips Securities
Location: NTUC Auditorium, 1 Marina Boulevard.

Time: 6.30pm to 8.00pm

Light refreshments would be available after each session.

Macquarie's Equity Strategist, Mr. Mark Matthews, will give his view on the market outlook for Singapore and the region in this special presentation. There will also be a short presentation on Singapore warrants.

Admission is FREE. Sign up now as seats are limited.  Register at http://warrants.com.sg/en/home_e.cgi

Related post:
The best way to trade the Singapore Index: SiMSCI warrants.

Advertorial.

Golden Agriculture: Breaking resistance.

CPO hit a 27 month high and this has pushed the prices of CPO counters higher on expectations that they would report better than expected results.  Golden Agriculture is the most levered to CPO prices and could be the biggest beneficiary of higher CPO prices.

On 5 Nov, I mentioned that "On 4 Nov, the following session, this counter traded the whole day at 70c or higher. Closing at 70c seems to have confirmed it as the new support." and that "With improving CPO price now a reality, it seems less risky loading up on CPO counters and that is precisely what market participants have done. Loading up on a pullback would be the prudent thing to do, however."

I still think that loading up on a pullback is more prudent but the rising wedge pattern has failed and price has pushed higher. 70c support is confirmed and should be something to watch out for in case of a pullback in price.

Golden Agriculture will be reporting its results on 11 Nov. If results disappoint, we could see the 70c support tested.  If results are better than expected, we might see its share price go even higher.

Even though a very long white candle formed today to close at the day's high of 78c, it is worth noting that volume was not as high as 13 Oct. The picture of negative divergence between volume and price is still present. Price moved higher today due to a lack of sellers and not an abundance of buyers. It would take a very brave person to load up to go long at this stage.

Saizen REIT: AK71 responds to a forum.

This is almost all of my very long comment in Wealth Buch in response to certain things said in a forum on Saizen REIT:

I have talked about the Japanese debt situation and how this has no impact on Saizen REIT before:

Japan's debt issue and Saizen REIT

As for the S$/JPY exchange rate and how the strong JPY is likely to weaken in time, we have to remember that exchange rate is bilateral in nature. The JPY could also weaken if the S$ strengthens.

MAS is allowing the S$ to strengthen in order to contain inflationary pressures. Will it allow the S$ to strengthen much more? If it does, would it not impact our exporters negatively? MAS is likely to be very cautious.

The residential real estate which Saizen REIT is vested in is below replacement cost. This means that no one in his right mind would construct new buildings. The supply side has stalled. The demand for inexpensive accommodation is strong and I have a blog post on this recently.

Asterisk Realty: Advisory for Japanese real estate

Saizen REIT owns freehold properties. Income distribution is therefore perpetual, ceteris paribus.

As for rental rates lowering 4% in Saizen REIT's latest tenancy renewals, how much of its total tenancy were so affected? Would such a trend continue?

The assumption that rental rates would continue to lower in Japan is just an assumption and is something waved around by people who think that Japan is going to the Land of the Dodos.

Jim Rogers is long JPY and believes that it will remain strong.  Marc Faber believes that people are so bearish on Japan and have written it off that it is a strong contrarian play. The JPY is still viewed as a safe haven.

In recent months, China's purchase of JGBs caused the Japanese government some concerns. The Chinese recognise the safety of JGBs compared to US Treasuries and have been diversifying away from the latter. As long as there remains a strong demand for the JPY for various reasons, the JPY is likely to stay strong. It's simple economics of supply and demand.

The recent revival of interest in Japanese real estate because of the sector's amazing yield is likely to increase demand for the JPY too. People who want to invest in Japanese real estate must pay in JPY.

It is not wrong to say that the high yield is normal for real estate in Japan but such high yield is not normal for real estate in some other countries, countries in which investors would like to get better returns for their money.

Related posts:

Saizen REIT: AGM on 19 Oct 10.
Japanese real estate: Has it bottomed?

REITs lower portfolio risk.

Apart from the attractive combination of income and capital return, REITs also offer diversification advantages. Real estate securities have a low correlation to general equities. This creates significant benefits when it comes to improving the efficiency of investors’ portfolios. It means the increasing of potential returns while at the same time lowering the level of risk, which is the underlying aim of every investor.

Unlike other sectors like tech or commodities, there is also a low correlation between the real estate markets across different countries. While global stock and bond markets tend to move together, real estate is basically determined by local factors and what affects the real estate market in one country will not necessarily affect the markets in other countries.

What is likely to have an impact on all REITs is the interest rate environment. As bond yields rise, the relative attractiveness of REITs tends to fall. This is because many investors, especially institutional ones, value REITs by comparing them with long term interest rates.


Source: UOB Asset Management.

Related post:
High yielding REITs.
Increasing demand for S-REITs.